Q3 2020 Embraer SA Earnings Call
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Such as converting E jets to carry cargo in the best of your Gabby.
The recently launched your you know 300, the mats, which was <unk> design it for medical evacuation.
Finally on the diversification you know visual partnership front, we are going to expand our operations.
This year, we have already announced that he was asking about cyber security.
The acquisitions off campus.
The front gate project with the breezy didn't need it.
More recently, the accretion off easy it company dedicated to the development of the European Air Mobility Echo system, and eat all electric vertical landing and take off aircraft.
With these fronts. We are also developing projects to expand our service offerings for aircraft from other manufacturers.
We are discussing potential strategic partnerships image and opening new markets and developing new products such as the turboprop.
It's important to note that debt.
In addition to managing a well we structure the project.
The plan focused on the process of execution and on the constant monitoring of the evolution off all initiatives.
We are aware of the challenges we have ahead.
Especially English mediation Twentytwenty one.
But we are very confident in the future <unk>.
We know what must be done.
We know how the bench will be carried out and do we have any mentally competent and a lighted team that you develop the necessary initiatives to make the company grow profitably in the coming years.
That's I have concluded my comments and I'd like to give the floor to always see a full one Thunder Garcia well what do you want Tanya. Thank you all.
The expenses cool <unk>, it's really a great pleasure to talk to all of you.
Now moving to the commercial aviation highlights on slide seven.
During the third quarter.
We delivered a solid seven E jets represent guests equation improvement compared to the first and second quarter.
That we U.S. Saturday, even more in the fourth quarter.
Among guard towards quarter end elements, we had five 170 fives for United Airlines, Hi, Lightning. Our continues laid the sheets and you asked about the regional jet market.
As another example of our country does you probably may.
I have ever read to de lever more blends in event in October then indeed entirely towards quite that off 2020.
As far as new operators Alliance Airlines for Australia received 14 bring your own.
He won nineties and bamboo Airways from Vietnam, you started operation, we do eat when mine five.
We are still not in the point to where we can give guidance on expected deliveries or financial performance due to the cold nights you started.
But we would like to point out that we remain.
Cautiously optimistic for the future as we have seen a grad doro rebounds domestic flight activity in several markets around the world in crude United States.
Looking commercial aviation 2021, the uncertainty around the <unk>, but then Nick artist you are.
Our biggest concern for next year.
The fleet off Oneseventy five me operations continues to improve we see 92 Reaper Sansing scarves hats off end of September outpacing our competitors in the market.
I'm also proud to just say that we had zero cancellation off commercial jet order season, beginning I'll sneak Corbett pandemic.
Yes, excuse me gets onto slide eight we had a strong deliberate because during the third quarter with 21 delivers.
These brought the thought is it even gets delivered so far in 2020 to 42 aircraft.
We expect a 40 quite a to remain strong for embraer and deliberate it's what's going to nutrient greens compared to the previous quarter.
As a result of higher deliveries improving mix and measure staking to be more cost efficient does exceed would get segments posted positive operating margins and then third quarter and year to date.
Marking they couldn't you just started rolling off or a profitability on this segment. Despite the COVID-19 pandemic.
Also as mentioned in the last call we launch, defeating 300 met during the third quarter.
She is a unique.
Mid to walk solution, that's also available for hats or feet on existing field three hundreds.
He said it was off a new technology <unk> genius to disrupt their media second matrix spray source. He bought futures now being stunned that while lavatory electrical doors and see that's confusion system, where both certified during the quarter.
Finally.
We would like to highlight the continued record doing there towards quite there.
Archie color with respect to the fracking for extra <unk> and tried to operation, we fret smarter smaller and medium jets amongst frictional small jets like Stephen was down only 30%.
Yea over year compared to the media and that's down to 18% and larger Jets 33.
Amongst tractors, you small jackup TV was almost flat versus last year why.
Why didn't the medium or large it gets glassware don't fives, just 70% respectively.
As you can see they're markets, where the Embraer E sports vision, we have for their funerals improved towards our recovery faster.
Moving to slide nine we showed the highlights for our defense and security.
Regarding this heat treat 90 billion new president. They are currently seeks csthree hundred 90, even at this stage of production for a future Delevers she'll brizzi went parts about.
And we expect to deliver one more aircraft you did because he led foresee stood this year.
The program also received the 2020 Grand Laurent Awards for defense from the Ideation week, we select the best check rest broken Black horse commercial as active defense around awards.
Another highlight during the quarter was the Super Tucano as Embraer was able to deliver it then plans to international customers.
We did a reopening of global borders, we weren't able to Delever Super Tucanos to Nigeria, Chile, and the Philippines.
Finally, the first grip and he arrived in Brazil to start its flight.
Flight test campaign, which is a major milestone in the Brazilian jet fighter program Weve subs.
Embraer, we all also play a leading role you designation off their program in Brazil, and they will be responsible for the systems to develop.
Integration flight testing, if I know somebody and de lever off the aircraft to do Brazil Air Force.
No Tony true sort of sense support things like Dan.
We are proud to just say that's embedded once again was ranked first in Brazil pilots incorporates our craft brought this supports surveys 2020 underlining our commitment to customers to provide the best Aftersales support possible.
Our service and support team also completed the seven commercial off the legacy for under 50 to appraise. Our 500 seats you Serbs became available early this year.
We were also able to get the certification that touch quarter off the first E jets modified for cargo transportation in cabbies offering our customers a solution to better utilize their fleets in the environmental floor passenger threats could cause it by the Cobi 90, and then.
Yeah.
Certain things servicing we are pleased to see that they see KC 390, millennial has been showing excellent to reliability you didn't meet their missions in Brazil and abroad.
Moving onto our financial results on this slide 12.
Our backlog finished third quarter at $15.21 billion.
Representing several years offer revenue 40 embraer.
It is important to highlight again that despite some deferrals, we didn't have any cancellation.
<unk> and we expect some new sales to potentially lead for a backlog expansion in the upcoming quarters, depending on the backs off a sequans is called visa waiver in certain regions.
On slide 13, we.
We show revenues and delivers.
We continue to see any brilliant meant in the third quarter.
Relative to what we had in the first half.
Half of the year and deep excellent Colby on the industry you start to reduce.
If a higher commercial end the zick stupid gets delivered in the quarter.
As I mentioned earlier, we expect an even better fourth quarter compared with your next door to each quarter.
We also had the stronger revenue improvement in defense and security following their reopening Offy international borders.
To allow for the deliberate itself so petrochemicals.
Our service and support business, yes.
Despite a year over year decline due to the Corvisa 90 has also increased double digits sequentially from the second quarter, we supposed station.
Improved activity across the commercials Xseven defense markets.
Next on slide 14, ebay highlights, it's going to cost control in Sally and then maybe switching to expenses there.
<unk> acid DNA reflects our ongoing efficiency gains through three actions as I read measured here in this presentation combined of course Roar marketing expenses coming from the <unk> 19 restriction.
It is important to mention that said expenses includes higher bad debt provisions.
Compared to last year, most of you really need the chores serves and supports the receivables.
It's cruel D. The bad debt provision SGN. They expenses when you should they be raising wages are 30% lower than.
In the same period of 2090 only.
Only slide 15, we show our operating results.
And Brad report that adjusted to be 80 off a loss of $45 million in the third quarter with marquee off minus 6%.
Yeah definitely be 18 that talked quite a bit it's grow that a positive impact of 7 million French special widens, including 54 million in charge related to our restructuring announced in September and 13 million in additional bad debt provision.
Offset by 75 minute positive you revered soft noncash impairment charge in the second you've been commercial aviation.
Breaking our third quarter margin by business is executing debts was positive <unk> percent sorry.
Surface sounds supports 4% positive defense, if she could reach breakeven similar to previous quarter.
Commercial aviation was response for didn't they got the Bill Prater results due to their low deliveries and they called apex.
So he slide 16 shows our adjusted EBITA D.A.
Which was a loss of $80 million and also excluding special items already mentioned the pages light.
Adjusted to be 80 market was minus 1%.
The combination of better volumes and cost cutting initiatives have already started to chew up here in the third quarter and we expect you strain to tracinda rates in the fourth quarter last year.
Moving to next is like 70 with earnings.
And Brad just said net income the reach at a loss of $548 million in the third quarter.
Our earnings have been negatively impact by the lower operating results as well as higher financial expenses and noncash FX losses seem.
Similar to $1.18 numbers net income also reach a bottom in the second quarter and has just started to rebound and we expect better bottom line performance in the fourth quarter, often easier driven by higher delivers.
Next is like it's like 18, we show Embraer stores talking investment over the last few quarters.
The company has launched several initiatives to cut the investments.
Including Capex as well research and development.
This reflects our actions to preserve cash.
It's also highlights embraer updates its portfolio, we face state so far the broad that's equal Merx aviation is excuse me jets defense in secret it.
Embraer has invested a lot in the last five years, bringing new programs and broadest you're there Mark and now we expect the upcoming.
Years, just show Lori investments.
Total investment during the third quarter, reaching 45 million.
And on the 24 million year to date, which is less than half of foreign investment to level off 2019.
Moving to slide 19, our free cash flow was a use of cash off.
$567 million in the third quarter.
These free cash flow use actually was negatively impacted by approximately 250 million include the three major items first.
One off charge off around 70 million related to the he's tricks during and severance costs package.
How far Red head count reduction in beginning of September so.
Second.
Our 100 million in short time, because my finest debt to be normalize now in the fourth quarter and turret I'm not the 80 million related to three plants. That's keep its from the end of the third quarter to the fourth quarter.
Disclosing that our cash consumption in the third quarter often easier to be.
Very close to the third quarter of 2019.
Giving expectation for higher deliveries in the fourth quarter, we feel positive impact to our working capital as well as our cost reduction initiatives. We are confident that our free cash flow you'd be much better than the fourth quarter of the year and we should be at least.
Cash breakeven in the second half of 2020.
Finally on slide 20, we highlight the always strong cash position.
Our liquidity increased during the third quarter, we assess what our cash position of $2.2 billion, which is a seamless cash level that would have.
Prior to quote and Debbie.
I'm also happy to announce that we complete a few years off the liability management initiatives, new laws with privacy and public banks as well new bonds issuance of $750 million.
Maturing in 2020 and.
That's right.
Repurchases of 250 million off outstanding 2022 went to 80 cheap bonds.
It's important to highlight that our new 2022, eight bonds is unsecured and had a mark to demand above 3 billion showing their coffee they suffer the vast or a longtime or famer.
With that I conclude my presentation, and we can open for questions. Thank you very much.
[laughter]. Thank you we will now begin the question and answer session. If you have a question. Please press star one.
Our first question comes from Robert Spingarn Eau de suite.
Hi, good morning.
Hi, Rob.
Hi, I'm just.
Just a.
A couple of different things first what gives you confidence in the outlook at commercial and executive Jets for you to reverse these impairments at this time well one improving trends are you seeing.
And does that include increased interest in ordering aircraft.
[noise] Oh, Rob it's Anthony speaking thank the good question.
Your reverse talking permits assuming that we revised it not quarterly basis.
It was highly driven by the exchange rate.
Devaluation. The brother you know we are we do have a lot of costs you re ice we I mean, we didn't change the bonds. We just ended exchange rates improved the margins we are.
Accounts 14, Paramount to reverse.
Just if we didn't choose the baseline.
I see are you seeing any evidence of something you've talked about in the past and that we saw after 911 are you seeing.
Actual down gauging at your customers from the commercial narrow bodies to the E Jets and is this a trend that is gaining some traction.
<unk> expenses Christy Thanks for the question.
We believe the domestic we don't want to rebound the first as it happens you get that says your mission and.
Okay, and then last real we'll look for more versatile flexible and more economical.
And we do believe that always yes are there will position he said that rich.
So that's why we believe we have a well have a good chance.
As soon as the market a peak.
Uh huh.
Okay and then my last question is about your inventories either in commercial actually in any of the segments, but do you have white tails in inventory and if so can you quantify.
Oh, yes so.
So they couldn't situation we have really a few we are sold out you just small jets and does it <unk>.
Hmm and the meat side definitely we still have three or four to be to be sold this quarter again minimal and also for the Quebec obligation we have no white they use for this funding we do have the only the carry over inventory that we are doing for the the most fundamental.
Deliberate as to 2000 planes to one but there's not a big amount what you do see nor have Anthony yes, we agree to run more or less 40% off or a revenue in the fourth quarter. We need. We are we too are strongly go down with four events in Q4 due to the higher deliveries in Q4.
But again, no biggie white days on inventory.
Thank you very much romance on Tanya true to compliment that said do it here.
So as I just said, we basically have no positions available. That's the reason we are so confident on on the fourth quarter, it add ons or recover.
R&D grant.
Okay. Thank you all thank you.
Well.
Okay.
Our next question comes from Myles Walton you'll be yes.
Thanks, Good morning.
Maybe antonio on the on the cash performance here in the third quarter, you laid out some of the onetime items, but I think that the commentary last quarter was you could have been you know.
Closer to breakeven even for free cash flow here in the <unk> in the third quarter. So I'm just curious.
What changed what what is you know pushed out to the right and you know I guess following on robs question why couldn't those continue to push out to the right. Realizing you haven't had any cancellations, but it.
It seems like deferrals or are more likely than not.
Yeah, we are minds. Thanks for the question again, we did the previous calls he mentioned that we are seeing and we see good chance to become I would say free cash flow break even the second semester second half of the year and we are still continue to believe as you could see we have a.
Cash burn in Q3 from 500 to $6 million to $7 million.
And.
You have to keep up for some aircraft deliveries to Q4, we have also due to severance payments that we've all heard the impacting Q3 will be much less in Q4, and we have to do huge amounts of the neighbors in Q4, we used to offset that and we have seen progress either improvement or free cash flow and.
So cash collection plays a role and also the other names that we are taking let's say, we're still confident that we'd be closer to breakeven in the second semester, but again I ask I bought my expectation the their third quarter. So we could be we could have been better too.
The 50 meter, but again, having these onetime effects.
Shifting gears effect for Q4, okay.
Okay, Hi, Joanne.
One point my as far its head to head.
We had some some planes that's really keep it so the fourth quarter, but that's what I'm, telling you highlighted in the call. We already delivered more planes. In October then the whole third quarter. So I think that shows that we are very confident on to reverse that is now in the fourth quarter and I would say all delever.
As for fourth quarter I confirm it. So we are not see a risk because our delays as we had we had some planes that moved from third to Jude.
From Q3 to four but now they are all compartment, okay, maybe an additional refurbish a mild a super to kind of see the lever is sustainable and we delivered its what we are going to book has already been linked caching now in Q4. We can also help does equation around 80 million that is not part of the Q3 results.
Okay and then he says working happy in the Q3, but we should see the rebound in Q4.
Okay, and Francisco, maybe I can ask you as you're repositioning the business and you want to get it obviously the commercial business in particular to.
Profit or a cash breakeven at worst what is the size what's the deliveries.
For the size of the commercial business that you're sizing the cost structure to in the workforce to.
[noise] congressional Myers, we are well be discussing is a lot in our in our plan for this one we use I mean, we still see the Twentytwenty one it was a very challenging year.
He would say is much higher and we see this year, but we are working yeah.
It is France, you know through a jerk.
The cost structure of the company to deliver a much better performance into it. It went to what you would see is not so much higher than that and thank you Tracy.
So and the main reason for that is the Cornish we wish we see that the 50 threerd. While there is still a challenging year for Commish review should we assume that there.
That's another what do we see an opportunity to grow I mean from Twentytwenty School boards.
Do you think 2021 could be breakeven for commercial aviation.
[noise] no commercial aviation, we were still suffering 2020, one, but we cannot they are one of the units we will have a much better performance next year.
Thank you our see this fiscal year.
But we we are we are seeing this year not there because our four miles. We we have to do <unk>. We are lucky to have the brother parts for them. We're seeing good performance. He got through margins for the kids and defensive secret in sub sea, which is more or less right you compensate the drop in the commercial aviation with regards to margins the result.
Let's start with you see the same picture and 20.21.
Okay. Thanks again.
Okay broker [noise].
Our next question comes from Ron Epstein Bank of America.
Hi, Good morning, everyone and this is my data.
Today.
Hi.
Yes, My first question will be Lieske love some color on that.
<unk> got them on finance Gosh headwind you had this quarter and not only that color on the quarter, but also how why are you confident that this is going to we call right going into next year and into next quarter.
Yeah that was really a a short term timing delays. So we don't do customer finance and we had the very short term.
Finance, that's we are transferring to the to the final finance agency and so so there's no risk of north reverting that so so we don't do we don't do customers fine.
And it's already we've.
Got it.
[noise] and decided I assume that.
I read cool segments, where do you see in Brazil that get lifted coffee is never sees that.
Yeah.
Okay, and then in general because I understand for competitive reasons, you kind of like equal our defaults that Oh gosh, probably community comes back to like pre funded Nick.
Anybody.
Oh, you're talking about the commercial or the whole business.
Commercial parties already.
[noise], Oh, well, yes, we're improving right are we suffer with the Lord the lever is especially in the first half.
Third quarter.
Already start to to show improvement, but the big improvement will come now in the fourth quarter as we mentioned October already better than the whole third quarter.
And we're going to have much more than the universe and that will drive a big improvement in cash profitability.
Commie from working capital reduction.
And also the cost adjustments that we did that for instance can find you highlighted.
And if I may the last slide you highlighted both men and be said operations have you seen sound like pickup in demand already.
Well, you mean demands it for four to 82 into one well for the four years.
Yeah, how are your sales campaign count, meaning if you have seen any pickup from business Jets the mine.
What's the deal there.
Okay, well I mean or is it still the issue is showing up with the reaction. We are for example in our Pheno family. We are sold out for three three we are 70 aircrafts for 53 to one the Pheno me. So it's it's moving well.
The defense and security we are working in different campaigns.
Well in housing nickel misread the issue we are working different campaign. So hope no. This a second wave off koby will not a reason either giving back when the opposite if we announced a new vaccine. This would help on what the rebound off the.
Regional in domestic flights that we will you will help us to boost our season, the commissioner of each one as well.
Okay. Thank you very much.
You're welcome thank you.
Our next question comes from Cai von Rumohr Colette.
Thank you very much so maybe you could comment on the mix of your Bizjets, you've done very well very well with the 300 and the 100 and basically very very poorly in terms of deliveries of the legacies and the prey tours.
Why you have that sort of extreme mix and should we expect a big pick up in those larger planes in the fourth quarter and going into next year.
Oh, hi, Thanks for the question, let me see if I understand your question, but a if you know three hunger is all of this center I mean these are most sold aircraft you category for the best I mean, 80 years and see I mean, what do we are we are improving our cities.
For the for the breeders did.
The 600, no Oh, so the 500 and then we have a.
Specific program specific initiatives in our strategic blueprint to into Onetwenty five to improve the effectiveness of between 100 and agreed to a friend's comfort and read those that we expect to capture additional market share to four years or older because we do believe that.
We family with the two fields, what how the three hundreds you need to break through the 500 seats.
Just to add Francisco now on the we had only two freighters in the third quarter right and 19 feature phones. So we expect a much better performance in terms of the Prader is now for the fourth quarter.
Great. Thank you Andrew got it that that that was essentially the question and then going forward because if we look at this year and last year basically the third quarter very weak for you know generally weak for the for the larger Biz Jets do you expect a more level yes.
Even a spread of the large bizjets because you know that the fee knobs, clearly doing well, but the large ones, where the product looks attractive doesn't seem to be doing quite as well [noise].
[noise] [noise] operator [noise].
No.
Ken Kenny here Scott.
Yes perfectly I don't know what that [laughter], yeah, there were some background and do it sorry, though just thought just a long beach with Kate It's it's a good question for sure. We you should see the chart I showed [noise].
The midsize guests they are not doing well compared with the small gaps that's why.
We are sold out in the this you know 100 to 300.
Since we still have some the open position for four days for the last quarter, but let's say, we do have a company for all of them at least I believe and so it was another question, but let's say you have to talk about five to six aircrafts on to be afraid to us I mean, the others, we are sold out and.
You saw the developers that have year to date 43, and we are seeing for the whole year mediation for.
<unk> totaled 20.2, he's actually the LIBOR, which shows that.
Last quarter, it would be hard to anyway for us, but for sure the meat Deli meats I guess they are suffering more and also the large jets compared with a dismal budgets.
Great and the last question is your gross margins have come down what should we think about where your gross margins. What are the is the incremental gross margin. We should think obviously you know you're up different businesses, but overall, if commercial and bizjet get better what.
Kind of incremental margins should the yield.
<unk>.
That's.
Is my point of view normalized being because we do not have that better leaks on terminals for the fiscal year.
<unk> expenses in the long run, 15% to 16% lets say for difference here.
And also and those okay, we have a.
Oh initiatives to to help us to reduce the cost of goods sold scope there huh.
As well to do reduce the professional side comes off there huh.
We will also help us.
The next question is going to Miss you also how close we released the girls marginal overpriced.
And one important point or maybe we were impacted by the idleness use hearing or gross marketing we will.
With that just meant that we had we not workforce is not going choose to happen next year, even the Q4 same was already.
You asked me today September was already well is it you didn't do that thing and if in cash flow adjusting the muscle September because they're adding that is being reduced and should be come to a and in Q4, which is an impact on our gross margin this fiscal year.
Very helpful. Thank so much.
Okay.
[noise]. Our next question comes from Noah Poponak Goldman Sachs.
Hey, good morning, everyone.
Illinois, Iowa.
In commercial aviation, you've mentioned that you haven't really had any cancellations.
But.
Yeah, there's clearly been a decent amount of deferral activity with the with this with the lower deliveries.
Can you speak to you know where are your customers deferring too.
Sounds like you're saying 2021 deliveries will be some.
Somewhere in the zone of similar to the 2020.
They deferring to 2022 or are they deferring even further.
You know are they giving you new plants that you feel are relatively firm or are they just don't kind of throw your hands up in the air and are still very uncertain as to when they're going to walk.
Oh yeah.
Thanks for the question the one the majority of the square was a between 2020.
From 22022 awards, especially the the local airline you believe Guizhou, which is a.
Yes, hi, heavily here and we do see EPS, that's useful measure to its all complete two I'm more or less the same level most of this year and speaking up.
I started 2022.
Or two out say, a mid seventys stance against them.
I guess the mountains to be fairly starting 2022 to 22 to EPS for.
Yes, there is no additional postponements or deferrals.
We may see maybe that's it.
So the army change the ER segment.
Excellent doing of course, there's not going to pack, we may see even a customer that's too to anticipate something but today's quite stable everything we discussed between March and April remains definitely also did the LIBOR itself can use your every t.. We discuss we was agreed between March and April.
And then there is no change.
Very stable.
If I may just add to.
To do here no. It's important to say that the situation is very fluid right given everything going on with all of it but ER at a first moment, maybe some customers they put out.
A big deferral, but as the situation it starts to get better they start to operate again, where the whole time talking to the customers and discuss thing when it exactly they're going to take it depends so as Anthony mentioned, there could be anticipations rights to the to the initial defer that they put so the situation could could really change the pain.
John how cold it goes, especially next year.
But again just to I Love me to compete we are set to the company for this new normal I would say in a lower base in the order that we are able to capture more when you get an improvement and then the recovering volumes.
We are not.
Randy the company by hope is really feet on the ground and be concerned, but even the ones for next year.
Yeah, No I mean, it just Oh also helping my colleagues here I mean this year, we had to face you are going to be an issue to bed things right. After we had today. They draw you know revenues because of the movie the bad but combined with cost much higher than the normal because of the current market the commercial aviation, but do we.
We have done our homework, we have adjusted their workforce and there wouldn't be so prefer ER initiatives to reduce costs to reduce it you enjoyed that would help us to deliver a much better financial performance equally between what even we see there's not much higher than 2020.
Okay, Great. That's all I appreciate all the detail on commercial.
Maybe you know kind of same question on executive I mean.
Obviously, it's fluid it can change but for now.
Would you speak to where you're planning production levels for total executive units 2021 2022.
[laughter] see sort of that 2021 fleet sleep Giuliani's giveaways and this is not easy even change or it's an L.P. process less miles and we do see something around 90 aircraft, but again still Freud, what do you see more or less.
A good level of 19 aircrafts.
Okay.
And then just last one on defense you know the quarterly revenues have been very volatile I know you had the.
Delivery restrictions, but it seems like it's been volatile even excluding that.
Yeah, when does the defense business I guess, just get back onto a more smooth.
Trajectory quarter over quarter and maybe.
Maybe just kind of walk us back through some of the bigger programatic moving pieces that can drive growth or not in that segment automotive your basis.
So let me go ahead of time where are.
With the for sure the always the defenses ring. He also in the <unk>, but it's off each government that's buying aircrafts for anything like what we do we do have some restriction with them see.
What you're seeing in defense we are.
Somewhere stable on the Super Tucano deliveries and also and the KC 390 volumes that we are operating far easier and also for next year. What's your still missing is additional sales for do see 390 million and that's we are right now we still see some additional companies.
But if you asked me what could boosted the situation really additional sales campaign for this week's ran up nicely.
[noise] should we be thinking about defense revenues.
Three to five years out.
[noise] meaningfully higher or you know something relatively similar to the current level no absolutely higher we have a little perspective on defense for the 20 years. You know we are now working gas weighted between 90 million you as Glenn mentioned, we also have a business with the depress your name.
But as you know army, we have a we have announced an acquisition of a cyber security company, but we see opportunity that a few there as well. So we have a good perspective for the defensive for the following five years.
Yes, okay. Thanks, so much.
No no.
Our next question comes from I'll go still AIDS Niki HSBC.
Hi, Good morning, just a quick question it looks in your financials that Youre your financial Inc. or your financial expenses increased sharply is that related to.
The pay down of the some of the some of your debt as well as the issuance of the new debt and what would be a more normal level not the one this quarter. Thank you.
Yeah. Thanks, Oh goes to yes, you're right there are some additional costs related to the new data.
That that to me race.
In the third quarter, we also had some impacts from.
Basically noncash FX losses, which is which is noncash and.
We also had an RV gi provision so that affected our.
Financial expenses.
Say the normal that well.
[noise] be more some feet around.
50 million per quarter.
That would be.
Our net financial expenses per quarter.
Including the new thank you very much.
Okay.
Thank you.
Our next question comes from Paolo Alto Loomis Sayles. Please proceed.
Hi, Thanks for taking the call and taking the question.
A loan maturity in the fourth quarter I'm curious how you are planning on handling that.
Sorry, what was the question.
Is.
The loan maturity in the in the fourth okay. Yeah.
Just curious how well [noise].
With the.
They handle that.
Yeah, so as I as I mention basically now we had the very short term.
Customer finance that was already sold and transferred to the finance agent. So there is no small feat materials. Okay. It had any fat and in fact, when you look at the picture of the end of the quarter, but it was already so.
So there is there's no 600 million maturity in the fourth quarter.
No no no no no no.
We have in the fourth quarter is a it's around 100 hundred 50 meter.
That's great. Thank you.
[noise]. Thank you. This concludes today's question and answer session that does conclude Embraers car audio conference for today. Thank you very much for your participation have a good day.
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[noise], but when it got some cross sell a hell a lot I Bell said don't won't be talking about Cuba.
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[noise] [noise].
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